Dive Brief:

• When marketers are transparent and communicate how they are using customer data to target ads, they see an increase in customer engagement and purchasing, according to research by Maritz Motivation Solutions and researchers with the Harvard Business School published in the Harvard Business Review. 
• The study looked at consumer reactions to marketers' use of personal data in two experiments using varying language on a website product detail page. In the first experiment, half of the audience saw "recommended" items, and the other half saw a more transparent message: "recommended based on your clicks on our site." The more transparent language increased click-through rates by 11%, time spent on product pages by 34% and consumers spent 38% more on the recommended items. 
• In the second experiment, half of audiences saw "recommended items" while the others were given the message "recommended based on what you've shared with us." Consumers were 40% more likely to click on items when told they were recommend based on information they'd shared with the brand, and they spent 31% more time on the product page. 

Dive Insight:

The new Maritz-Harvard research highlights consumers' growing concern over how their information is being used by marketers. While consumers reward brands that take the time to offer them more personalized products and experiences, the research demonstrates that marketers can further drive engagement and sales by providing a few extra details about how those recommendations came about. The news is especially timely amid Facebook's growing controversy over how it handled the personal data of 50 million users and how that data was transmitted to Cambridge Analytica, a Trump-backed data firm, without their knowledge.

Data drives marketing segmentation and personalization efforts. As marketers work to achieve higher levels of personalization using consumer data, the added value of transparency can help them see greater returns on their marketing spend. Consumers often don't mind sharing personal information with their favorite brands, especially when they get something out of it, like curated products. An Accenture survey found that 43% of consumers are more likely to purchase from brands that personalize experiences, and 31% said they value services that automatically learn about their needs and offer recommendations.

However, 92% consider privacy to be important when it comes to sharing personal information, and 79% expressed frustration that some companies can't be trusted with personal information. Being upfront about the data being collected from consumers, how it's used and shared and how long it's stored will let brands build stronger, more trusting relationships with their customers. Lack of trust and poor personalization caused 41% of consumers to switch companies in 2016, costing businesses an estimated $756 billion in Accenture's analysis.